A Technical Look At Brent Crude Oil Near Term
$OIL, $USO
The near-term technical picture for Brent Crude Oil is still Bullish despite Tuesday’s sell-off after seeing resistance around the 50–Day MA.
We cannot ignore how Crude Oil has rallied recently, it has risen nearly 25% in 3 trading, representing the strongest 3-day rally since Y 1990 when Iraq invaded Kuwait. Perhaps some of those who missed the initial rally may now look to “buy the dip.”
If it was profit-taking that caused the sell-off, Crude Oil will now have to hold above Key support levels that are being tested. If not there is a risk the price will be back to about 43 bbl very soon.
As can be seen from the chart below, the psych mark and prior resistance at 50.00 was being tested at the time of this writing.
If Brent Crude holds above here on a daily closing basis, then it may make a move towards the Bearish trend line that has been in place since June last year, around 55.00.
Then, depending on what happens, Crude Oil may either fall back or sharply extend its gains looking for a breakout. If support at 50.00 breaks down then the B ears may aim for the next support at 48.20 or even the important mark at 45.00/20 as the next Southside targets.
Expect volatility to remain high, volatility means trading opportunities.
Crude Oil has fallen this year even US gasoline demand expanded, stimulated by a growing economy and low prices. Total gasoline supplied to the US market rose to an 8-yr high of 9.7-M BPD last month, according to US Department of Energy data.
WTI Crude Oil could fall to as low as 10 bbl as the Organization of Petroleum Exporting Countries (OPEC) engages in a “Price War” with rival producers, testing who will cut output 1st.
Iran is soon to release 53-M bbl to the market and will be producing up to 1.5-M BPD in 6 months or so.
Long term outlook for both Brent and WTI Crude Oil is due South.
OPEC says it will cut production, and are going to see who can stand lower prices longest, since October of 2014 HeffX-LTN sees that Crude Oil is likely is headed for 20 – 22 bbl in the mid term.
Stay tuned…
HeffX-LTN
Paul Ebeling
Stay tuned…
HeffX-LTN
Paul Ebeling
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